GFMS ups its 2009 copper forecast by some 10 pct
by Reuters News on 19 August 2009, 12:45 PM
communities.thomsonreuters.com
LONDON, Aug 19 (Reuters) - Metals Consulting Group GFMS has raised its copper price forecast by around 10 percent for this year and expects higher prices until 2012 on expectations of stronger metals demand, the company said in on Wednesday.
"Strong Chinese consumption coupled with expectations for a recovery outside of the country to commence late in the year has led us to revise our projections," it said in an embargoed report.
GFMS now expects an average copper price of $4,900 a tonne for 2009, compared with its previous price range of $4,400-4,500 a tonne set in May.
By 1141 GMT benchmark LME three months copper was trading at $5,955 a tonne.
But it expects a decline in copper prices in the short-term due to profit-taking, before they bounce back again in the last quarter of this year, possibly rising to their highest of 2009.
London Metal Exchange copper <MCU3> has gained nearly 40 percent since early July and has more than doubled since the start of the year, to hit an 10-month high of $6,480 a tonne last week.
GFMS said the profit-taking was expected to be short lived, with funds and end user consumption triggering a move to deficit in 2010, setting a positive trend for the price from Q4 this year. LME copper stocks are currently just below 300,000 tonnes.
"At that stage, we would not be surprised to see prices topping $6,500/tonne and generating a Q4 average of $6,000/tonne, resulting in a full-year figure of $4,900/tonne."
Due to this predicted increase in demand the company now estimates a smaller surplus of 245,000 tonnes for this year compared with the previous 441,000 tonnes.
The balance for the copper market will move to a deficit of 88,000 tonnes in 2010, GFMS said, thanks to "a strong recovery in consumption coupled with slower mine production (and by implication refined production) growth".
The market moving to deficit is likely to trigger additional investor interest to copper, which will help further boost prices, GFMS said, adding it expected the copper cash price to top $7,500 a tonne and averaging $6,500 a tonne next year.
Currently copper cash price <MCU0> trades at $6,115 a tonne.
"The deficit is expected to persist throughout the rest of the forecast period, and its magnitude in fact grows in 2011 and 2012, to 121,000 tonnes and 176,000 tonnes respectively," GFMS said.
(Reporting by Humeyra Pamuk, Editing by Keiron Henderson) |
